Competitive Bidding As An Effective Tool For Vendor Selection In The Public Sector (A Case Study Of Ministry Of Work, Owerri Imo State)

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Competitive Bidding As An Effective Tool For Vendor Selection In The Public Sector (A Case Study Of Ministry Of Work, Owerri Imo State)


Abstract


These study was set to assess competitive bidding as an effective tool for vendor selection in the public sector using a case study of Ministry of Work, Owerri Imo State, they were guided by three research objectives which included examining the influence of competitive bidding on vendor selection and service delivery management, evaluating the influence of competitive bidding on vendor selection and service delivery and assessing the influence of restrictive bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State. The study found out that open competitive bidding and restrictive bidding are prevalent in Ministry of Work and used by the district to solicit for service providers. It was further established that the level of open competitive bidding had a mean index 2.652) implying that open domestic bidding influence service delivery management at a small extent since the mean generated provides a figure that is slightly above the average 2.5.Restrictive service delivery had the total mean index is (2.3344) in reference, in the questions presented, it can be construed that restrictive bidding affect service delivery management in Ministry of Work, Owerri Imo State at the smallest extent. The analysis of regression further confirmed that competitive bidding influence service delivery management in Ministry of Work, Owerri Imo State. It was also found that open competitive bidding relates to service delivery management and so restrictive bidding. The researcher denotes that the nature of the relation could be a sign of other factors which influence service delivery management in Ministry of Work, Owerri Imo State, hence the need for consideration in recommendations. Based on the findings of this study, the following are recommended; public Perception of tender Evaluation Confidentiality. The public perception of the tender evaluation confidentiality is low. There is a need for an increased emphasis on ensuring improvement in confidentiality perception not only on evaluation but the entire public procurement; and the prevalence of relationship between competitive bidding and service delivery management indicate that there is need to adequately comprehend competitive bidding in Ministry of Work, Owerri Imo State. The procurement department and departments affiliated to procurement need to adequately adopt competitive procurement in order to realize value for money.


Table of Content


Chapter One

1.0 Introduction

  • 1.1 Background to the Study
  • 1.2 Statement of the Problem
  • 1.3 Objectives of the Study
  • 1.4 Research Question
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organisation of the Study

Chapter Two

2.0 Literature Review

  • 2.1 Conceptual Review
  • 2.2 Competitive Bidding and Vendor Selection for Service Delivery Management
  • 2.3 Open Competitive Bidding and Vendor Selection for Service Delivery Management
  • 2.4 Restrictive Competitive Bidding and Vendor Selection for Service Delivery Management
  • 2.5 Related Studies on Competitive Bidding and Vendor Selection for Service Delivery Management

Chapter Three

3.0 Research Methodology

  • 3.1 Research Design
  • 3.2 Population
  • 3.3 Sample and Sampling Technique
  • 3.4 Instrument for Data Collection
  • 3.5 Validity of the Instrument
  • 3.6 Reliability of the Instrument
  • 3.7 Method of Data Collection
  • 3.8 Data Analysis

Chapter Four

4.0 Results and Discussion

  • 4.1 Result
  • 4.2 Discussion

Chapter Five

5.0 Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • Appendix

Chapter One


1.0 Introduction

1.1 Background to the Study

The background has four dimensions or perspectives which include historical, conceptual. theoretical, and contextual

Globally, competitive bidding is most often used by government agencies that are required by law to periodically open all contracts to bid and must award business to the lowest bidder. This is intended to ensure impartiality in buying decisions. However, it also makes it more difficult for the supplier to communicate value or quality advantages that may justify a higher price. The supplier must attempt to predict how competitors will bid in order to be priced competitively. The supplier may bid relatively low if excess capacity is available to be filled, or it may bid relatively high if it has a significant competitive advantage. Competitive bids sometimes have a mandatory deadline and may require a deposit to establish the financial stability of the bidder. Johan, N. (2006).

Increasing global competition means that organizations in both the public and private sectors need to concentrate on what they do best. Effective procurement strategies and well managed supply chains enable organizations to do just that: focus on developing and delivering products and services that exceed customer expectations. We have been contributing to organizations across the public and private sectors to develop effectiveness in the management of costs and services, raising the recognition of procurement as a driver of efficiency and change.
Lawai, S. (2000) pointed out that competitive bidding is an especially common practice with government buyers, many of whom have instituted mandatory bidding procedures. Government buyers are typically required to accept the lowest bid that they receive, but it is important to note that low bids can often be disregarded if they are judged to be lacking in meeting minimum job specifications. Business experts indicate that a spectrum of business trends is also increasing the importance of competitive bidding in ensuring small business success. One of the most dramatic of these trends is the one toward increased outsourcing by companies of all sizes. The aspect of competitive bidding in organizations majorly translate into increased and improved service extension to the customers.

Tendering is widely discussed by the purchasing text books as an act by which submission of a quotation is made by a tender when so desired by a client, which may be an individual, a group of people, a company, government or any of it’s parastatals. According to Oyeku and Nwanneka (2001) tendering which is a widely acclaimed from purchasing is monthly used in local, state and federal government purchasing. It represents one of the three methods through which buyers can determine the price to be paid for goods a and services he purchases. Tendering also help the purchaser to obtain the best and supplier that can meet the requirement and it is usually required when the monetary value of the purpose purchases exceeds statutory naira limitation. Tendering is used sometimes in the private sector to obtain a fair and reasonable price especially in respect of contraction and service contract. Procedures associated with tendering are designed to protect the interest of both the tender and the purchaser and to reinforce concepts or openers and impartiality. These situations that pave way for the use of tendering, they are as follows:

  1. Where the monetary value of the contract is huge and high.
  2. Where the sellers are technically qualified.
  3. Where there many suppliers who are willing to bid.
  4. Where the terms of delivery is very important.
  5. Where the specification of items or services must be discussed.

Tendering is effective tool for vendor selection. It has contributed greatly to the organization profit, there are so many advantages of tendering but problems associated with it. Tendering usually end with the lowest price tender getting the award of the purchasing firms gains a reputation for negotiating with the lowest tender after bids are opened. This will make future tenders not to offer their price initially believing that they do better in way subsequent negotiation. They will adopt a system of submitting offer low enough to allow them to be included in any negotiation. But initial offer will not be as low as when it is anticipated that the award will be made to the lowest tender without further negotiation. Tendering tend to great pressure on suppliers to reduce their cost to be able to bid as low as but profitable price this cost pressure may result in sacrifices in product quality development efforts and other vital services.

The real use of tendering appears to be widely understood, this system of pricing is frequently abused by both government and private establishment. It is because tendering has been stressed as the method of pricing and allowing able constituents their qualification. In reality, planning preliminaries correctly for tendering takes purchasing judgment of the highest planning specification proper selection to tight supplier collect quantities, precise delivery schedules, adequate time for placing bids and general economic analysis is done correctly, selecting the successful tender after the bids are evaluated are generally a routine matter, except in unusual circumstances the lowest tender should receive the order, purchasing judgment and analytical planning should normally be exercised before tendering are request not after the bids are in Public Procurement can be defined as the acquisition, whether under formal contract or not, of works, supplies and services by public bodies. It ranges from the purchase of routine supplies or services to formal tendering and placing contracts for large infrastructural projects by a wide and diverse range of contracting authorities. Basheka, B. C. (2008). Bidding is an offer (often competitive) of setting a price one is willing to pay for something or a demand that something be done. A price offer is called a bid. The term may be used in context of auctions, stock exchange. card games, or real estate.


1.2 Statement of the Problem

Nigeria is among the developing countries embracing the international agenda as far as service delivery is concerned. Service extension both at the local government and central government is committed through procurement procedures whose value sometimes is unseen and or doubted. The poor trend of service delivery is especially ascribed to the choice of non-competitive methods of choosing service providers. Despite the legal regulations of sourcing service providers of high value thresh holds under competitive methods of purchasing, the adoption trends are very low and in cases where it has been used, it is marred with inconsistencies in provision of service because the key guiding parameters are not adequately set. It is based on this analogy that the researcher conducted a study at Ministry of Transport Imo state in order to evaluate the worth of competitive bidding application if any in order to realize value and provide recommendations for effectively operating the competitive bidding.


1.3 Objectives of the Study

The aim of this study is to assess competitive bidding as an effective tool for vendor selection in the public sector using a case study of Ministry of Work, Owerri Imo State.

Specifically, the objectives of the study include to;

  1. To evaluate the influence of competitive bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State.
  2. To assess the influence of restrictive bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State.
  3. To access the influence of open bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State

1.4 Research Question

The following research questions are formulated to guide this research:

  1. What is the influence of competitive bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State?
  2. What is the influence of restrictive bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State?
  3. What is the influence of open bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State?

1.5 Research Hypothesis

  1. HO1: There is no significant impact of competitive bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State
  2. HO2: There is no significant impact of restrictive bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State
  3. HO3: There is no significant impact of open bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State.

1.6 Significance of the Study

The study will also be of great benefit to the students who will be able to access this information that will guide them in research and equip them with knowledge as far as competitive bidding and service delivery is concerned and the importance of bidding in ensuring service delivery in the Nigerian public sector.

This research paper will be of prime benefit to the management and staff of local governments not only for the of Work, Owerri Imo State but for other states as well, since it will enable them identify and understand the risks and problems associated with competitive bidding and how best to combat such problems.

The researcher will full fill the requirement for the award of Bachelors of supplies and procurement management of universities and gain more knowledge on the subject. It is upon presentation the research report that the researcher will be awarded bachelors of supplies and procurement.

Other academic researchers will use the data collected to come up with better mechanisms of managing the entire supply chain.


1.7 Scope of Study

The scope of the study covers the Ministry of Work, Owerri Imo State. The concern of the study was to assess competitive bidding as an effective tool for vendor selection in the public sector using a case study of Ministry of Work, Owerri Imo State. This was chosen because of the access by the researcher to the study area and being a public entity handling procurement undertakings. The study was conducted on competitive bidding mostly tackling open competitive bidding, restricted competitive bidding, vendor selection and service delivery in the organization.


1.8 Limitation of the Study

This study has quite a number of significant limitations to it. The first was that the researcher as a worker has to combine the work with the study and this was not easy. Additionally the study was conducted using a single organization and this resulted to high cost of transportation and in some most cases, low attendance by staff of the organization visited for the distribution of questionnaires on some days of the week. Conducting a study of this nature in our environment receptive of answering the oral questions while others did not take time off of study the questionnaire hence few of the discard due to wrong filling. These limitations did not affect the outcome of the study in any way.


1.9 Definition of Terms

Competitive Bidding:

Competitive bidding involves a proposal by one company seeking to offer services or bid for business with another company. When a company, organization, or government agency needs goods or services on a large scale, it typically puts out a solicitation in the form of a request for proposal (RFP).

Vendor Selection:

The vendor selection is a subsidiary process that allows clearly stating, defining and approving those vendors which meet requirements of the procurement process. Often vendor selection criteria vary between organizations; however, they need to be identified and included as a component of the inventory management plan.

Public Procurement:

Public procurement refers to the process by which governments and state-owned enterprises purchase goods and services from the private sector.

Open Bidding:

Open Bidding allows you to invite third-party demand partners to compete for your inventory in a single auction with real-time, server-to-server bidding.

Restrictive Bidding:

Restricted bidding means a two stage contract award process. Restricted bidding means a procedure used in procurement of goods, works and services having a complex character or where a high number of economic operators are active on the market.


1.10 Organisation of the Study

This study is organized into five chapters. Chapter one included the background of the study, research problem, research objectives and questions as well as limitation of the study. Chapter two contains the literature review. Chapter three includes the methodology. Chapter Four contains the results and discussion of key findings of the study. Chapter Five finally looks at the summary, conclusions, and recommendations based on the findings.


Chapter Five


5.0 Summary, Conclusion and Recommendation

5.1 Summary

The study was carried out to assess competitive bidding as an effective tool for vendor selection in the public sector using a case study of Ministry of Work, Owerri Imo State. The regression analysis shows that service delivery does not depend on competitive bidding is 16.988. Service delivery management and competitive bidding had their respective levels of significances as (.032 and .0 I 0) respectively. Since .032 and .0 I 0 are less than 0.05, the researcher concludes that there is relationship between competitive bidding and service delivery management in Ministry of Work, Owerri Imo State.

The regression analysis between open competitive bidding and service delivery management at Ministry of Work, Owerri Imo State presented that service delivery management and open competitive bidding had t values of (6.205 and 2.101) respectively with their respective levels of significances as (.032 and.049) respectively. Since .032 and .049 are one is less than 0.05, the researcher conclude that there is a relationship between open competitive bidding and service delivery in Ministry of Work, Owerri Imo State.

Regression analysis between restrictive competitive bidding and service delivery management at Ministry of Work, Owerri Imo State presented the levels of significance between service delivery management and open competitive bidding at 0.32 and 0.44. These values are less than 0.05 implying that there exist a relationship between restrictive competitive bidding and service delivery management in Ministry of Work, Owerri Imo State local government.


5.2 Conclusion

These study was set to assess competitive bidding as an effective tool for vendor selection in the public sector using a case study of Ministry of Work, Owerri Imo State, they were guided by three research objectives which included examining the influence of competitive bidding on vendor selection and service delivery management, evaluating the influence of competitive bidding on vendor selection and service delivery and assessing the influence of restrictive bidding on vendor selection and service delivery in Ministry of Work, Owerri Imo State. The study found out that open competitive bidding and restrictive bidding are prevalent in Ministry of Work and used by the district to solicit for service providers. It was further established that the level of open competitive bidding had a mean index 2.652) implying that open domestic bidding influence service delivery management at a small extent since the mean generated provides a figure that is slightly above the average 2.5.Restrictive service delivery had the total mean index is (2.3344) in reference, in the questions presented, it can be construed that restrictive bidding affect service delivery management in Ministry of Work, Owerri Imo State at the smallest extent. The analysis of regression further confirmed that competitive bidding influence service delivery management in Ministry of Work, Owerri Imo State. It was also found that open competitive bidding relates to service delivery management and so restrictive bidding. The researcher denotes that the nature of the relation could be a sign of other factors which influence service delivery management in Ministry of Work, Owerri Imo State, hence the need for consideration in recommendations.


5.3 Recommendation

Based on the findings of this study, the following are recommended;

  1. Public Perception of tender Evaluation Confidentiality. The public perception of the tender evaluation confidentiality is low. There is a need for an increased emphasis on ensuring improvement in confidentiality perception not only on evaluation but the entire public procurement.
  2. The prevalence of relationship between competitive bidding and service delivery management indicate that there is need to adequately comprehend competitive bidding in Ministry of Work, Owerri Imo State. The procurement department and departments affiliated to procurement need to adequately adopt competitive procurement in order to realize value for money.
  3. The public procurement authority should start thinking of having in place a separate body to handle the administrative reviews. As providers become more aware of the provisions within the law for them to seek redress, more applications will be received and the complaints review Committee who has other day to day activities could find it difficult to handle all these complaints in the required time. The administrative review will streamline public procurement and improve compliance and conflicts.
  4. Strengthen ICT applications and strategic management. It was established that compliance does not automatically lead to cost effective, timely, and quality road works delivery. It also established that the districts develop work plans that have no strategic orientation to address efficient and effectiveness of service delivery. The recommendations are that.
  5. Relevant measures should be instituted to sharpen the translation of the observance of the Act into value for money. This can be achieved with for example, application of modern information systems at all local administration levels, effective management with sound strategic planning and It was also established that district employ brilliant scholars, however good performance only but also other attribute such as nationalism, on-going development, and ability to perform with dedication and integrity.
  6. The officials should undergo ongoing, intensive and wholesome training to improve on competence and integrity. The global environment is too dynamic, complex and thus turbulent requiring flexibility in the execution of the procurement functions. Products are changing constantly, so are specifications. Procurement officials must be fully knowledgeable of these changes to effectively perform. If there is need, the department should be financially facilitated to outsource some expertise in situation of complex specifications.
  7. Lastly, the major hindrance cited for the poor delivery of work is the late and under funding of the sector by the central government. Relevant lobbing should be carried out by local politicians. Relevant NGOs and CBOS to ensure adequate and timely funding of the sector. It is good the government has given the highest priority to the sector this financial year. Emphasis should be on appropriate use of the funds.

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